How the Welfare Reform and Work Bill will affect families with disabled children
Many families with disabled children and young people are likely to be worse off as a result of the Welfare Reform and Work Bill. This is mainly due to the difficulties of combining working and caring. Therefore, they are more likely to be living in poverty, on lower incomes and claiming a range of benefits across the system.
Research conducted by Contact a Family with more than 3,500 families with disabled children across the UK shows they have been hit time and time again by cuts to welfare in the last few years. A third has already been affected by welfare changes, nearly a half of these by £1,560 per year. They are not in a position to shoulder any more.
The changes and freezes announced to tax credits and Universal Credit will leave many families with disabled children on reduced incomes. In particular, growing families may face severe hardship when support is limited to two children from 2017.
Contact a Family are deeply concerned that the Bill will have a significant effect on many families with disabled children - increasing poverty and hardship for one of the most vulnerable groups in society.
Assessing the impact of the benefit cap (Clause 8)
The impact assessment accompanying the Bill contains no detail on the possible impact on households with disabled children, disabled young people or disabled adults not in receipt of DLA/PIP.
We therefore believe the Government should therefore urgently carry out further assessment of the impact on disabled children and adults and their families before the threshold is lowered.
Suggested amendmentClause 8, page 11, line 29, at end insert new sub-clause:-
() Before lowering the benefit cap threshold the secretary of state should assess the impact of the benefit cap on disabled children and adults, their families and carers and report his or her findings to parliament
Reviewing the impact of the benefit cap annually (Clause 8)
The suggested amendment below would mean that the Secretary of State must consider the impact on disabled children, adults and their families during the proposed annual review of payment levels.
Suggested amendmentClause 8, page 10, line 30, at end insert new sub-clause:-
() the impact on disabled children and adults, and their families and carers, and
Four year freeze on working age benefits (Clause 9)
We welcome the freeze does not apply to the extra disability additions/premiums that are paid as part of tax credits and means-tested benefits, nor to disability and carers benefits such as Disability Living Allowance (DLA), Personal Independent Payment (PIP) and Carer's Allowance.
However, overall low income families with disabled children will still be worse off in real terms as a result of the freeze in the other amounts they receive.Freezing working age benefits for four years will mean a cut in income in real terms.
We believe this is inconsistent with the Conservative manifesto commitment which stated (p28): ‘We will freeze working age benefits for two years from April 2016, with exemptions for disability and pensioner benefits – as at present’.
Suggested amendmentClause 9, Page 11, line 33, at end insert new sub-clause:-
() People who are disabled under the Equality Act 2010 definition are exempt from the freeze
Removing payments for third or subsequent children and the family element from tax credits (clause 11) and universal credit (clause 12).
Contact a Family is concerned about the impact on families of disabled children of the proposal to limit Child Tax Credit to 2 children. Normally the amount of tax credits received increases with your family size. This is because you receive an additional payment known as the child element for each child in your family. However, families will no longer receive an additional child element for a third or subsequent child born after 6 April 2017. Similarly families claiming Universal Credit will also not receive a child element for a third or subsequent child born after that date.Removing payments for third or subsequent children means that families claiming after 2017 will get £2780 less than under the current system for each subsequent child.
The family element is a tax credit payment of £545 per year which is awarded where the claimant has at least one dependent child. This will be scrapped for new tax credit claims from April 2017. From the same date an equivalent Universal Credit payment known as the higher first child element will also be scrapped for families making new claims under the Universal Credit system. In housing benefit a similar amount known as the family premium will be removed for new claims and new births from April 2016.
While we welcome the Disabled Child Element being retained we believe that where a family includes a disabled child, their claim for Tax Credits or Universal Credit should not be subject to the rule limiting payments of the child element to two children or removal of the family element in child tax credit, the family premium in housing benefit and the higher first child element in Universal Credit.
Suggested amendment
Clause 11, page 13, line 12, insert new subsection:
(5) Persons are exempted from Subsection 4 (3B) if any child or qualifying young person is disabled including, but not limited to, those persons in receipt of the disability element of child tax credit
Clause 12, page 13, line 23, at end insert –
(1B)The provisions in (1A) do not apply if any child or qualifying person is disabled including, but not limited to, those persons in receipt of the disabled child element of Universal Credit
Case study from the Contact a Family helpline on tax credit changes
Couple with 2 children aged 4 and 10 months. 4 year old has Autism and gets the highest rate care component of DLA as he has day and night-time care needs.
Father works over 30 hours per week and earns £24,000 gross per annum.
Mother is unable to work because of son’s needs. She claims carer’s allowance of £62.10 per week. They have no childcare costs at present.
Tax credit amount
Based on their circumstances and their ‘current year’s’ income they are entitled to tax credits of £114 per week.
From April 2016, because of the increase in the taper to 48% and the reduction in the threshold to £3,850, the family’s tax credit award will be reduced by£30.
This reduction would be greater but the income figure used to calculate the award from April 2016 will be lower than the current income figure.
The family’s tax credit award will be further reduced by £10 per week if proposals to scrap the ‘family element’ go ahead as planned.
Employment and Support Allowance (Work Related Activity Group) (Clause 13)
From April 2017, disabled adults (including young disabled people) who claim Employment and Support Allowance (ESA) and who are placed in the work-related activity group (WRAG), will receive the same rate of benefit as those claiming jobseeker's allowance. This amounts to a cut of almost £30 per week.
The WRAG consists of people who have been assessed as being unfit to work but who are expected to undertake activities with a view to making them work ready over time. This cut will only apply to new claims made after that date and not to existing claimants. It will also not affect the most severely disabled ESA claimants who fall into the ESA 'support group' rather than the WRAG.
Contact a Family are also concerned that the financial support available to some young disabled peopleis to becut asby reducing the amount paid to new Employment and Support claimants who fall within the work related activity group.
Universal Credit: Work Related Requirements (Clause 15)
Contact a Family are concerned about the implications of the proposed change in conditionality for responsible carers on Universal Credit. This would see responsible carers with a child aged 3 or 4 being allocated to the All Work Related Requirements group and requiring them to look for, and be available for work.
Many parent carers of disabled children aged 3-4 will be unable to fulfil these requirements, particularly due to the well documented lack of childcare for disabled children. While carers of children in receipt of the higher or middle rate care component of Disability Living Allowance (DLA) are exempted from these requirements, many children under 5 do not receive this benefit due to difficulties in identification of need during early years and administrative delays.
Suggested amendmentClause 15, page 14, line 43, at end insert new sub-clauses:-
() The provisions in this section do not apply to those responsible carers of disabled children aged 3 or 4
() The Secretary of State must lay regulations determining what a disabled child is for the purpose of this subsection and may include, but will not be limited to,
(a) those children in receipt of an Education, Health and Care Plan,
(b) those children in receipt of a Statement of Special Educational Needs, (c) those children identified by their local authority as having special educational needs,
(d) those children with child in need status,
(e) children meeting the definition of disabled under the Equality Act 2010.
Loans for mortgage interest (Clause 16).
The Department’s equality impact assessment argues that turning Support for Mortgage Interest (SMI) into a loan may improve work incentives as some people may move back into work quicker to avoid increasing their debt. However for many out of work families with disabled children, the barriers to employment such as their caring responsibilities and the lack of suitable childcare means they can unavoidably find themselves out of work for an extended period of time. Despite saving the state a small fortune in the care that provide free of charge, these families could thus find themselves burdened with a significant additional debt over and above their original home loan.
Rather than motivating parents to move into work, Contact a Family fear that turning SMI into a loan will act as a significant deterrent to carers starting employment.
One of the aims of the Universal Credit is to remove barriers to part-time work as a pathway to moving into full-time work at later date. However, turning SMI into a loan doesn’t reflect this policy intention. Parents taking tentative steps into work will not only find that they lose all help with SMI as soon as they start working but that they also then need to start repaying the SMI they have previously received. This runs the risk of creating an ‘unemployment trap’ for parents who might otherwise start to think about gradually moving into employment.
Where claimants don’t move into work, then the government envisages that the SMI loan is to be recovered when the property is sold. However this also throws up huge potential problems. For instance a parent may wish to sell their home in order to buy another property that more suited to the needs of their disabled child. If part of the equity from the sale of that property is used to repay a loan for SMI, then they may be unable to afford to buy other another property. This may serve to trap families in their existing property, even though it may no longer meet the needs of their disabled child.
Contact a Family feel that the policy is difficult to justify given that owner-occupiers already receive less help with their housing costs than those in rented accommodation. They only receive help with mortgage interest not their repayments and there is also an initial waiting period where no help is provided. The amount paid to claimants SMI also tends to be less than the amount paid in Housing Benefit to tenants in similar circumstances. Faced with this disparity in financial support, owner-occupiers with little or no equity (or in negative equity), may feel forced into giving up their home rather than to take on extra debts via a loan for SMI. This would not only be very disruptive, upsetting and stressful for the families involved but could also ultimately lead to the state paying more through the additional costs of re-housing a family and meeting their housing benefit.
In light of the financial sacrifices that many parents with disabled children already make and the significant barriers to employment they face, Contact a Family believe that parents with a child on DLA or PIP should continue to receive support with SMI as a benefit rather than a loan.
About Contact a Family
Contact a Family supports families with disabled children whatever their child’s condition, wherever they are in the UK, we’re there from the start and we’re there whenever they need us. Call there Freephone helpline on 0808 808 3555. For further information visit
For more information
Una Summerson
Contact a Family
Tel: 020 7608 8742
Email: Date: November 2015